Kodak Announces Agreement with Flextronics for Design, Production and Distribution of Digital Cameras

Eastman Kodak Company announces an agreement in which Flextronics International Ltd. will manufacture and distribute Kodak consumer digital cameras and will manage certain camera design and development functions. Under the agreement, Kodak will divest its entire digital camera manufacturing requirements to Flextronics, including assembly, production, and testing. Flextronics will also manage the operations and logistics services for Kodak's digital still cameras. Kodak will continue to develop the high-level system design, product look and feel and user experience, and will conduct advanced research and development for its digital still cameras. Kodak will also retain its intellectual property.

Upon closing of the transaction, Flextronics will acquire a significant portion of the Kodak Digital Product Center, Japan, Ltd. ("KDPC") in Chino and Yokohama, Japan, and associated camera design functions and its employees and the digital camera manufacturing, assembly and warehousing requirements and related employees of Kodak Electronics Products, Shanghai Co. Ltd. ("KEPS") in China.
Kodak will retain all intellectual property and patents as part of the transaction as well as Kodak trademarks, Kodak trade names, Kodak customers, customer information and customer relationships, Kodak feature specifications, Kodak digital camera designs and Kodak digital camera technologies.
Under the agreement, approximately 550 Kodak personnel are expected to be transferred to Flextronics facilities.
The transaction is subject to customary regulatory approvals. The agreement does not require shareholder approval from either company. Closing is expected to occur after all required approvals have been obtained and certain other conditions are satisfied, which is anticipated to be during Kodak's 3rd quarter of 2006.

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